New Jersey investigators say the owners of two South Jersey nursing homes engineered a years-long scheme to siphon tens of millions of Medicaid dollars into their own pockets, leaving vulnerable residents in chronically understaffed facilities where preventable injuries, untreated pain, sexual assaults, and at least one death unfolded in plain sight.
The 53-page report released Wednesday by the Office of the State Comptroller paints a sweeping picture of misconduct at Hammonton Center for Rehabilitation and Healthcare and Deptford Center for Rehabilitation and Healthcare, two 240-bed facilities that together received $134.8 million in Medicaid funding from 2019 to mid-2024. Investigators found that $92 million of that money — more than two-thirds of all Medicaid dollars paid to the homes — was funneled to a network of related businesses owned or controlled by operators Daryl Hagler and Kenneth Rozenberg.
According to the report, Hagler and Rozenberg “built a business that systematically redirected public funds intended for resident care to their own and their family members’ bank accounts,” using real-estate deals, inflated rent, undocumented fees, and shell-company transactions to extract extraordinary profits while providing “dangerously low” levels of care.
Residents paid the price.
State survey records, police call logs, and volunteer eyewitness accounts gathered by investigators describe a pattern of despair: residents left crying out for help in soiled diapers, diabetic patients going days without essential medications, a resident with a broken catheter unable to find a nurse, and two people at Hammonton sexually assaulted by another resident. At Deptford, a man limited to a pureed diet was given solid food, asphyxiated, and was not discovered for many hours.
“Vulnerable people suffered unnecessarily because the owners decided to put the money in their pockets instead of paying for the staff to care for them,” Acting State Comptroller Kevin Walsh said.
A System Built to Extract Profit — and Hide It
The investigation details an elaborate structure of nine related-party companies, from staffing agencies to IT vendors to building maintenance firms, many owned by the operators’ spouses, children, or business associates. None of the companies had contracts with the facilities, investigators found, and many invoices lacked basic documentation. Several entities were never disclosed on mandatory state and federal cost reports.
Hagler and Rozenberg reported paying just $882,666 in related-party expenses during the review period — even though they actually transferred $92 million to those companies.
“This was not a simple error,” investigators wrote. “Hagler himself signed the false cost reports.”
The most lucrative tactic involved real estate. As detailed in the report, the operators bundled the purchase of both the nursing homes and their properties into a single $63.2 million mortgage, then used an inflated rent structure to push the costs — and profits — back onto the facilities. At Deptford and Hammonton, investigators found $27.8 million in duplicative “additional rent” payments that flowed directly into Rozenberg’s and Klein Family Enterprises’ accounts.
“These ‘rent’ payments were primarily funded with Medicaid dollars,” the OSC wrote.
Chronic Understaffing, Unqualified Staff, and Missed Medical Care
To understand how these financial choices affected residents, investigators audited more than a thousand staff timecards and compared them to state-mandated staffing ratios.
Both homes failed to meet the required ratios on nearly every day reviewed — 82 days at Hammonton and 64 at Deptford.
- Hammonton was 52% understaffed on average, with nearly half its required care hours missing.
- Deptford was 54% understaffed, also missing more than half the direct care needed.
Both 240-bed facilities were required to have a registered nurse on site at all times. Yet investigators found they routinely used LPNs acting out of scope to fill RN roles — an illegal substitution that occurred on 66 of 82 days at Hammonton and 60 of 64 days at Deptford.
One survey cited in the report found just two nurses on duty for more than 100 residents at Hammonton. Another documented delayed insulin administration for 18 diabetic residents — some delays exceeding three hours.
Police were repeatedly called to fill the gaps. Deptford generated more than 2,400 police calls during the review period; Hammonton generated about 1,000. Residents pleaded for help with broken catheters, unmanaged pain, prolonged incontinence, or the absence of staff. In one instance, a resident reported being fed “dog food or not being fed at all.”
At Deptford, a longtime volunteer told investigators the facility was “disgusting,” with extreme odors, soiled bedding, flies on food trays, and residents left thirsty, hungry, or sitting in waste. Photos included in the OSC’s report — severed call bell cords, overgrown toenails, spoiled meals — echo those accounts.
“The Tip of the Iceberg”: Oversight Failures and Calls for Reform
State officials and advocates say the findings go far beyond two facilities, revealing structural weaknesses in New Jersey’s ability to monitor, regulate, and intervene when nursing home operators divert public money away from resident care.
During Wednesday’s press conference, Acting State Comptroller Kevin Walsh said the investigation illustrates how easily operators can hide profit-taking behind complex ownership structures. He warned that New Jersey must “focus on excessive profit-taking” and build a regulatory system that can “tangle with the nursing homes when they’re found doing the wrong thing,” emphasizing that meaningful oversight depends on far greater financial transparency.
New Jersey Long-Term Care Ombudsman Laurie Facciarossa Brewer went further, calling the report “a bombshell” that documents “financial trickery and substandard care” at Deptford and Hammonton while exposing broader vulnerabilities across the industry. “This is the tip of the iceberg,” she wrote, warning that New Jersey’s oversight agencies are “not up to the task of keeping up with the many schemes that these millionaires and billionaires have created.”
Brewer stressed that the problems highlighted by OSC — chronic understaffing, falsified cost reports, undocumented payments to related companies, and profit extraction disguised as rent — are not isolated errors but symptoms of a system that allows owners to operate behind opaque networks of LLCs with minimal scrutiny. She also noted that the OSC Medicaid Fraud Division remains “the only entity saying no and closing the door” on unscrupulous operators, and argued that DOH and DHS need substantially more staff and resources to review financials and monitor conditions in real time.
AARP New Jersey echoed those concerns, saying the Comptroller’s findings reveal “a level of dysfunction and lawlessness… nothing short of shocking.” State Director Chris Widelo said the report details “horrific incidents – including the death of a resident, two sexual assaults, and thousands of 911 calls” from facilities that were supposed to be providing care. “These are the most vulnerable people in our state, and they are being failed at every turn,” he said.
AARP also pointed to “egregious financial abuses” uncovered by investigators, including owners who “took out mortgages on nursing homes, then transferred those mortgages to related-party real estate companies they also control — allowing them to charge the facility inflated rent and divert millions of dollars away from resident care.” This practice, Widelo said, has long been suspected but “this is the first time it has been publicly documented… a pervasive business model.”
“New Jersey spends more than $2 billion a year on nursing homes, yet too many facilities continue to understaff, underperform, and endanger residents,” Widelo said, noting that since FY2022 nursing homes have received “more than $250 million in additional state funding with no added transparency requirements.” He urged lawmakers to adopt new reporting laws: “Without the ability to follow the money, New Jersey cannot protect residents or hold operators accountable.”
The Comptroller’s Office is now seeking $123.9 million in repayments and penalties from the owners, their families, and related entities — one of the largest attempted recoveries in its history. But Walsh and Brewer both warned that without structural reform, similar schemes will continue undetected in other facilities, leaving taxpayers responsible for subsidizing poor care while owners shield profits behind undisclosed corporate arrangements.
Local Angle: Transparency Bills S1948 and A1872, and the Mercer County Delegation
Much of the misconduct uncovered would have been visible sooner — or prevented altogether — if New Jersey required nursing homes to publicly disclose their web of related-party companies and the profits flowing through them, the OSC said.
To close those gaps, the Comptroller again urged lawmakers to pass S1948, which would require:
- Audited, consolidated financial statements for each nursing home
- Full disclosure of all related-party companies and payments
- Ownership charts showing corporate structures and control at every level
- Public transparency of submitted financials
S1948 is sponsored by Sen. Joseph Vitale and Sen. Angela McKnight and co-sponsored by Mercer County’s Sen. Shirley Turner and Sen. Andrew Zwicker, whose districts include the Hopewell Valley and surrounding region. Both Turner and Zwicker did not respond to MercerMe’s request for comment on Wednesday.
A parallel measure, Assembly Bill 1872, contains the same provisions and is moving through the Assembly. The bill is sponsored by Assemblywomen Shanique Speight, Tennille McCoy, and Garnet Hall, with several additional lawmakers listed as co-sponsors — including Assemblywoman Verlina Reynolds-Jackson, who represents the Hopewell Valley. (MercerMe had not reached out to Reynolds-Jackson or McCoy for comment as of Wednesday.)
Walsh said New Jersey’s oversight framework must change if similar schemes are to be prevented in the future.
“It should not take a multi-year investigation to detect fraud of this magnitude,” he said in the report.
